What type of investments will help reduce my taxable income?

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I am 27-year-old working for a multinational company (MNC), drawing a net salary of ₹1.4 lakh per month. My annual income is ₹22.3 lakh, of which my taxable income is ₹15.5 lakh. My tax-savings come from section 80C instruments, where I utilize the maximum limit of ₹1.5 lakh per annum (p.a.), and exemption from house rent allowance (HRA) is ₹2.8 lakh p.a. There is professional tax of ₹2,400 p.a. I have also purchased a flat for which I have taken a home loan of ₹36 lakh at 9.2% interest rate. My equated monthly instalment (EMI) comes to ₹30,000. How can reduce my taxable income further? —Name withheld on request Salaried individuals try and maximize their tax savings by claiming various exemptions and deductions while computing taxable income.

The old tax regime allows an individual to save income tax through various exemptions and deductions like medical insurance premium, HRA, etc. However, if an individual opts for the new tax regime, then he or she cannot claim the above-mentioned deductions. In the current case, we have assumed that you are planning to opt for the old tax regime.

You can use Section 80CCD (1B) of Income Tax Act (IT Act), wherein additional deduction of ₹50,000 is allowed in a financial year for investments made in National Pension System (NPS). Such deduction is over and above the deduction of ₹1.5 lakh provided under section 80C. The Section 80CCD (2) of IT Act allows deduction on employer’s contribution to NPS.